With the changes in Import VAT requirements following new Brexit Rules, can anyone confirm if the below would be correct pratice for the scenario described without using postponed VAT accounting?
- Supplier purchase invoice received for goods over the value of £135.00.
- Recorded as an overseas supplier (US) purchased invoice with VAT rate at 'Zero Rated' - Invoice value added to Box 7 only.
- Invoice received from courier detailing: Import VAT, Import Duty and Handling charge (normally £12.00) which they have paid on our behalf to clear goods.
- Record the courier purchase invoice with the listed items posted to Import Duty, Import VAT and Carriage costs. All of which are expenses?
(what should the VAT rate be for these?)
- Record payment of the Courier Invoice and wait for the C79 for to arrive.
- With C79 in hand, make adjustment to box 4 once having cross checked the value for import VAT on the C79 with that in the Import VAT nominal account for the quarter.
Any advise appreciated
Many thanks
Replies (7)
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Sounds like what I would do, although I don't keep the vat return boxes in my head!
Just be sure not to double count vat from the c79 and the courier invoice.
I code everything as zero rated in this situation. Obviously you need to code the import vat with whatever code is needed to pick it up on the return.
I code the import VAT as a cost (to one of my freight accounts)
I code any VAT being charged by the courier for using their account to VAT as normal.
When I get the C79, I post a journal to credit freight and debit purchase vat.
I make sure that this is a 'taxable' journal, so the balance sheet debit picks up on my VAT return.
How that works will depend on your software.
If you don't do this, the amount of VAT on your return will not equal your nominal balance.
Bear in mind journals do not routinely feature on VAT returns.
Unless you can't recover it, import VAT is not a cost in the P&L sense? If you pay import VAT of £1000 it needs to be included as VAT on purchases.
In the pre PVA world I'd been using a 100% VAT rate with a negative invoice line contra to a 0% VAT rate, so the invoice shows net £0 VAT Dr £1000. This gets the £1000 into box 4. (The net comes from the supplier invoice of course).
Post PVA you haven't yet paid the import VAT, but you must account for it on to your VAT return, using boxes 1 and 4.
I understand, but, technically you cannot claim it back until C79.
By charging to P&L and then 'unpicking' I feel the balance sheet code is a more secure value.
If everything hit BS first, I wouldn't feel so confident in it.
Whatever works best for you. I do it the other way, if its not on the C79 I adjust it out, which is rare. I usually find there are things on the C79 that I wasn't expecting!
“Wait for C79 to arrive” - unless it’ a client whose vat return is being prepared, in which case you ask them for the C79 and they reply that they “haven’t had one of those” or “I don’t know what you mean; I’ve paid the vat so just claim it back” or “I’ll have a look tonight but I don’t think so” (delete as appropriate). ;-)